While almost every stock brokerage company claims to have the lowest prices, the truth is that a little research on your part can quickly find the genuine low-cost stock trading companies among those that simply make the low-cost claim.Which low-cost broker is right for you will depend in part on what your needs are. If you require a lot of advice and hand-holding when it comes to choosing which stocks to buy and when to sell, then your universe of low-cost stock accounts will be different from someone who makes all her own trading decisions and is basically looking only for someone to execute trades.
Determine what services you need from a broker. Do you plan to rely on your broker's research to find the stocks that you want to buy? Or will you make your own decisions and only rely on your broker for timely executions of your orders?
Check out full-service stock brokers with name recognition if you require a great deal of help and advice or if you want a broker who will physically place each order for you. Brokers such as Merrill Lynch, Morgan Stanley and Lind-Waldock all offer a full range of services to clients, with fees that reflect their high level of individual service.
Open an account with a full-service broker to take advantage of more than just stock trading advice and execution. Full-service brokers also offer tax advice, money management advice and other expert financial planning. Often these services appear to be "free" when, in fact, your account is charged a monthly or yearly fee (often called a "wrap" fee); ask about any account fees before signing up.
Make your own trading decisions at even lower-priced brokers. Non-full-service brokers offer no advice on which stocks to purchase and do not offer many--if any--additional financial services. Discount brokers such as Interactive Brokers (IB), Scott Trade and First Trade will execute your stock trades for $7 or less with no yearly fees.
Go online and look up Discount Brokers. Compare not only per-trade fees but also any yearly fees and any recurring account fees. Also check out the minimum amount necessary to open an account.
Tips & Warnings
- Take your time. Read the fine print at each website. Look for hidden fees.
- Keep in mind that published fees are charged both when you buy a stock and when you sell.
- Don't trade options or futures unless you have sufficient experience and a large trading account.
The Average Cost of Trade School
Trade schools are the gateway to promising careers for people of all backgrounds. As the cost of every type of education continues...
How to Increase the Oil Pressure in a Car
Ask any high-performance engine builder what the main cause of engine failure is and, short of parts breakage, it is problems with...
How to Trade Low-Volume Stocks
Low-volume stocks trade between 10,000 and 100,000 shares a day. Some may have no trades at all on certain days. The biggest...
How Low Can a Penny Stock Go?
Penny stock is common stock issued by small companies, and it generally trades at $1 to $5 per share. Penny stocks trade...